Published on August 15, 2024
Brand loyalty is a concept that many people often misunderstand. When a customer prefers buying from your brand even when competitors offer the same products and services in a similar price range, that is called brand loyalty. Most businesses are often invested in bringing in new customers, and they usually overlook the importance of existing customers. Without understanding the importance of brand loyalty, you will lose customers. Today, we will learn the basics of customer retention, describe the three levels of brand loyalty, and discuss how to achieve them.
Existing customers are a stable source of revenue for a business. Attracting new customers will introduce your brand to newer markets, but with customer retention, you have guaranteed business. Acquiring a new customer costs 4 to 7 times more than retaining an existing customer. With brand loyalty, you build confidence in your customers about your product. This confidence encourages them to keep buying from you regardless of your prices and their convenience. You must go through the three stages of brand loyalty to achieve customer retention. This article will help you understand these levels of brand loyalty and the strategies to achieve them.
A business needs to understand the meaning of brand loyalty to succeed. Today we will describe the three stages of brand loyalty. These three levels are:
Each level has its substages to understand to achieve brand loyalty.
The first level of brand loyalty is brand awareness. It is the level of familiarization of your brand to your audience. In this stage, you must be concerned about familiarizing your brand with your target market. Brand awareness very much depends on the first impression. You win or lose a potential customer on your first impression. You have to identify the type of your audience and target them accordingly. For a new brand, there can be 2 types of audience, i.e. switchers and habitual buyers.
These are the type of customers who have no loyalty to any particular brand. To gain their interest, you have to stand out among your competitors so that they become willing to try your product. You can attract them by offering discounts and offers. Competitive prices are the best way to attract switchers. You can also try targeted marketing campaigns to attract these customers through social media and influencer marketing.
Once you have convinced switchers to try your brand, try converting them into your habitual or satisfied buyers. This level of brand loyalty can only be achieved by providing them with a quality customer experience. Offer them loyalty discounts and welcome-back offers that urge them to buy from you again. Existing customers are more likely to make a purchase (60-70 percent), while the likelihood of a new consumer making a purchase is only 5–20 percent.
When a brand values customers, they prefer to keep buying from them. This is the second level of brand loyalty, called brand preference, which is a sign of customer loyalty. At this stage, you will deal with two types of customers: one type that prefers your brand out of convenience and the second that actually likes your brand better than the others. Retention of both of these types of buyers requires different strategies.
These are the types of buyers that prefer buying from your brand out of convenience. The convenience could be your competitive prices or the accessible location of your outlet. These buyers can still go back to becoming switchers. 62% of customers are likely to switch brands if they offer more convenience. That’s why it is important to work on their loyalty. Show these buyers that you are more than a generic brand. Make them feel valued and respected. Create a connection that prevents them from switching. The good news is that this connection is easier to develop at the second stage of brand loyalty than at the 1st stage.
These are the customers who like your brand. Many factors influence the stage of brand preference, such as the packaging or overall appearance of a product. Your brand’s values could make customers prefer you over other brands and help you reach the second out of 3 levels of brand loyalty.
Such customers can be powerful advocates for your brand. More than 75% of people buy a product based on its positive reviews and experience. Encourage these brand likers to leave positive reviews and spread good word-of-mouth referrals for you. Foster brand likers by providing them with quality customer experience.
The final level of brand loyalty is brand insistence. It is the stage where a customer only prefers a single brand to repeatedly buy a product or service regardless of any convenience or offers provided by other parties. At this stage, the customers start associating a product with your brand, even though it is offered by other brands too. For example, people go to a store to buy a Coke, not a cola. Even though there are other competitive brands, people prefer Coke because they are used to its taste. Coke has become a generic for the cola drink.
Such customers are the most valuable for a brand. These customers bring in the most revenue; you should never risk losing them. You must spend the minimum on advertising to these customers because their devotion to your brand pays you in the long run. The two key reasons for such loyalty are:
If you provide exceptional quality or service to your customers, they will keep buying from you. People prefer imported products because they are manufactured with the highest quality international standards. Providing good quality service directly improves brand insistence.
Another reason for brand insistence is emotional connection. If a person has been using your product for a long time, they develop a connection for it. This connection makes them habitual of your product. They search for your product in markets even when the alternatives are available.
To retain customers with this level of brand loyalty, you need to create personalized experiences. These customers are already loyal to you, but you can’t take them for granted. Keep providing them with quality and personalized experiences to make them feel valued. By keeping customers engaged, you can retain up to 89% of your customers.
Takeaway:
Customer retention is as important as acquiring new customers to increase sales. Understanding brand loyalty and its stages is very important for a business to retain its valuable customers. Here we have described the three levels of brand loyalty for you. Understanding each level of brand loyalty will help you strategize your marketing efforts. You must be aware of the level of brand loyalty a customer has so that you can provide him with services accordingly. These 3 stages of brand loyalty will direct your business toward sustained growth and success.
